Don't be scared away by the sticker price...

Paying for College
101

Instead of thinking of it as the school telling you how much you can afford, think of it as the school telling you how much they can afford. “This is our financial aid budget and we need to stretch it over all the students we’ve admitted. Therefore we can pay this much to subsidize your education.”

The cost to the college of educating a student is usually more than the sticker price. Even those paying full fare are being subsidized by generous donors, some of whom are paying the full price for their kids to attend college as well.

It stinks that college is so expensive, but there are many options, and the some of the highest priced schools have the best financial aid.

102

Maybe there are forums where people in search of cars bitterly complain about the “lie of affordable luxury” when it comes to high end sport cars, sedans & SUVs. Where they wonder why the most desirable cars models almost never have any kind of incentive offered by dealerships and where they complain that their 200k salary hasn’t been that high for their 20-40 year long career so it is outrageous that BMW, Porsche and Range Rover don’t figure out an equitable solution for each affluent car consumer’s desire to own a particular car.

I have never heard of a forum like that, but it is what I think of when I hear people in the 90% (or higher) of income distribution complain about “not being able to afford” the high-end private (and OOS public) colleges and universities in the US. As a member of that group, I understand that our family chose not to prioritize saving for college over all other savings…which is why I am also clear two years before my oldest applies to college that there are a list of schools at which it makes no sense for our children to apply. If a school is on the “meets full need list”, I know that means our family will be expected to come up with full COA.

We haven’t set up our finances to pay for that in a way we are comfortable with (though to be clear, we could make choices to make that possible). But we would rather pay off our mortgage at a 15 year clip rather than 30, max out retirement savings, have the children continue the activities they love, vacation where we want to go every other year, remodel parts of the house, buy organic foods that we value, attend concerts and other cultural events and go out to eat once a week to a nice non-chain restaurant.

Yup, my taxes are 2-3x higher than others in the same area and I live in a 3bed/2bath 1960s split level. Yup, my mortgage is twice was much as other areas because we chose a great school district. I suppose I could be jealous that friends of ours have second homes on lakes that we don’t have, drive expensive cars, vacation every year, bought the fully renovated home, or send their children to very expensive schools like HYPS but as a grown up - I realize that those friends made different compromises and choices to afford the things they prioritized. As a grown up, I also accept that private (and OOS public) schools get to set their COA without thought to what I might want to pay, and also share their money in ways that enrich and expand the mission they’ve chosen to pursue as an institution, not so that I might be able to afford sending my child to that school without giving up the consumption choices I prioritized over college savings.

There are plenty of families who make 20-100k a year who erroneously believe they won’t receive very much financial aid because many state schools (where many families concentrate their college searches) don’t have very much financial aid to offer. Imo, it is good for families at that income level to be given the information about private school affordability that may well expand their college search and offer college choices that cost less than the state schools they might have previously considered. But if you are smart enough, hard working enough and lucky enough to be in the top 10% on income earners - I think it is time to stop complaining that you can’t sustain the the lifestyle choices you’ve made as an adult (or don’t want to make the changes necessary to afford) while also sending your children to the most expensive private colleges and universities.

103

Funny, I don’t receive mailings and e-mails on a daily basis from high end car dealers and luxury real estate agents telling me how accessible they are to everyone and how special I am and that I really should have the best. Nor are those private businesses receiving billions in federal funding from public tax dollars or get non-profit status. So maybe that’s why you don’t see that kind of griping.

When our higher education system is not dependent on private schools to educate the masses, there are good affordable public options for college ready kids at a range of institutions (because that ACT 23 vs 28 vs ACT 33+ really probably would benefit from different educational options), and private schools aren’t receiving tax dollars, that discussion will end.

Please stop telling people what they can afford. When you take out large loans as an aging adult heading toward retirement, that is a huge risk. We have been saving for college all along. We live a modest lifestyle. Our mortgage is almost paid for by design so that can roll into paying for college. Health care (and that’s a whole other issue) alone can be a huge bottle neck to families. I know some sandwich generation folks that are raising kids, paying off student loans, and suddenly have an aging parent living with them because they didn’t plan well for their elder years including taking out parent loans for their kids college. It’s a HUGE gift to your kids to have a well funded retirement. We do not have as many safety nets as other first world countries. When people default later we all pay for it. The default rate is climbing
https://www.washingtonpost.com/news/grade-point/wp/2017/09/28/the-number-of-people-defaulting-on-federal-student-loans-is-climbing/?utm_term=.ca51c7a4a48d

Having a realistic single EFC that schools could or could not meet and transparency in the system would be a good start. Having school counselors talk about cost as a first point would be another good thing. Having people actually financially qualify for loans they take out would be a good third. I would say don’t be scared by sticker prices but colleges scream that from their roofs. I’d also say beware of marketing. Schools don’t care about your bottom line. When 70% of Yale students are from families in the top 20% of earners, that is very telling.

104

I apologize if this has already been mentioned, but it isn’t only U’s and LACs with 10% admit rates (or lower) offering to meet need.

Johns Hopkins
Notre Dame
Emory
Vanderbilt
Wash U
Georgetown
Rice
Carnegie Mellon
Tufts
Wake Forest
Boston College
Brandeis
U of Rochester
UVA
UNC
…and some other >10% admit rate universities

And a whole bunch of >10% LACs…

Say that they meet 100%, or very close, of demonstrated need according to their definitions.

It’s not just HYPSM, other Ivies, UChicago, and top-5 LACs…

105

Considering that our household income last year(family of 4) was around $17,000, it would still be most likely impossible to come up with $6,000 per year for college. My kids are good students, but my rising senior only scored a 24 on the ACT so he is not competitive for the meets full need schools or for the big scholarships at state schools, unless he can somehow drastically raise his score. Even though he has always been one of the top students in his class it is a small rural school with limited course offerings, no honors or AP classes. The nearest college is also at least a 45 minute drive, so commuting to community college would still have quite bit of vehicle cost. At this point the only thing that looks possible are a small number of the historically black colleges that might offer a full ride with his stats. I see stories about poor kids going to college for free, but I think that is a small number compared to all of the kids out there, the ones that aren’t very high stats or URM generally have very few options.

106

On CC we spend a lot of time discussing FA at elite schools and counsel students who can’t afford to attend one of the elites to just to chase merit money.

We do tend to ignore the average student out there. The 20-24 ACT (51-74%iles for all kids taking the test, presumably all kids who want to attend college) kid who is neither going to qualify for a needs met elite school nor be able to get more than a token amount of merit money. These are the kids I worry about, the kids who have to have a car to get to community college an hour from home or take on insane levels of debt in order to attend a residential college.

107

I totally agree @Sue22. I really think the numbers as they aren’t don’t work for lots of families out there. If Heart of Dixie’s son could get a 10% EFC at a public institution for a total of $1700, that would be a lot more workable. Kids like her son deserve college too as a kid doing well in the classes available to him with an above average ACT. And who knows if he had access to an ACT tutor and higher level classes what his stats would look like now.

I fully admit my kids have plenty of privilege.

Our urban public community college is free for 2 years for kids under an income of 75K coming from our district and a handful of surrounding districts. Would LOVE to see more programs like that available. My kid is currently dual enrolled there. Our state also has free dual enrollment for qualifying kids. Another great option and FREE for high achievers.

108

Where are those top 20% of earners suppose to go if not to Yale? Their kids have been preparing to attend top schools just like the other 4.0/1600 kids.

We have a public school here where the families are in the top 5% of earners. They all go to the same high school because they live in the neighborhoods served by that school (and district). Wealthy business owners, sports stars, cable magnets, real estate tycoons. No one seems concerned that they do not offer scholarships to attend the public high schools to middle income students living in another neighborhood… Even within the district there is the ‘rich’ high school with 95% of kids going to Ivies and Stanford and the flagships and ‘lesser’ high schools that send their students to the directional and state university system schools. The district does allow any student who attended the Challenge (magnet) k-8 school to go to the ‘best’ high school because they want the best and brightest students there, even if they can’t afford to live in the rich neighborhoods. We have several top private prep schools that do offer scholarships, but 90%+ of their students are still from high income families paying full tuition. No one thinks these private schools ‘owe’ it to anyone to provide financial aid to students to allow them to go to the private elite high schools even though those schools have non-profit status and get federal funds.

109

I guess everyone gets different junk mail, because I do receive a lot of unsolicited letters from car dealerships telling me that they have great deals waiting for me (tons this upcoming week in fact!) and also get mailers quite regularly telling me of new homes on the market (many quite pricey!) in my area…but of course, I look at those pieces of mail as the unsolicited junk mail that they are and they get tossed in the trash. I don’t magically think I can afford a new SUV just because I get mail advertising an “Independence Day Sale!!!” nor that I can afford a $1m home just because it came on the market and a glossy mailer was sent to my home. No matter how much those mailers entreat me to “come on by and talk about how to make the magic happen”.

I am not trying to tell anyone what they may or may not be able to afford (each family must determine their own budget) because we all choose to used our income and savings in different ways. The only person whose finances I know well enough are my own. However, I am willing to say that “meets need” colleges get to decide what they are willing to give to those who apply/are admitted to their schools and as long as the full price COA is available before anyone applies - it is a “buyers-be-aware” market. The financial aid formulas are well enough known (rough estimate is to take 35% of AGI and 6% of non-sheltered assets as a baseline) to know that what I, personally, want to spend and what “meets need” colleges will expect me to spend are not compatible. So, unless I change my criteria - colleges above my determined threshold are exactly like the Cadillac SUV and the beautiful home listed for $1m. Very nice and above my willingness to buy.

Much like I didn’t rely on a bank to give me the uppermost limit of what I could afford to borrow in order to create a housing budget (instead I looked at what I had saved, what I was earning and what my future reasonably looked like - and then determined I wanted to spend about 1/4 what the banks were willing to lend me) - I am not relying on the FAFSA EFC to tell me what we can afford, though I will acknowledge that the formula is accurate in terms of what would be available if I had not already prioritized other consumption/savings over paying for college. Again, we went back to what we saved, what our income is and what the future looks like. As we, too, are getting older - we don’t want to de-prioritize retirement savings.

Which means, the budget for our children’s college is what we determined the budget for college is. We feel blessed we have saved enough to pay basically the cost of a instate flagship at full price (which gives us room to allow the children to find privates and OOS publics that fall in that budget range as well).

Each family needs to figure out a budget for college that works for them and THEN figure out a college list that has the reasonable potential of working both academically and financially. My kind, smart, talented children won’t be able to apply to some really wonderful schools because I am not willing to pay as much as those schools want me to (nor was I willing to sacrifice other needs/wants to give my children unlimited options for college funding). That isn’t even close to being a tragedy or even a problem. There are still scores of wonderful schools where my children (and many others) can thrive.

110

This thread is about “Don’t let the sticker price fool you”. But what about when the sticker price really IS the sticker price? People like us aren’t well-served by threads like this, and it could use a dose of reality. So I do feel that it is valid to point out that the endless - and pervasive, repeated, and completely untrue- claims that any student who gets in can “afford” to go are both false advertising and unkind. Young people who have been told for years that they are working hard to get into a good college, then are recruited endlessly to apply to these very elite colleges blowing smoke up their butts with “Congratulations ,
your accomplishments stand out even in a crowded field…”
These ads are personalized, and become increasingly clever and complex as the admissions cycle wears on - Look! I can fold this postcard into a 3-D representation of the Duke chapel! And…it’s a pencil holder!

We were flattered for our first child, then afterwards recognized what that really was - marketing to drum up applications, for the sole purpose of making the school seem more “selective” by being able to reject more students.
But for my second, even with our eyes open, we walked into the second trap. We misunderstood fundamentally that the EFC was “per profile”, i.e., per student. So while my sons EFC was $86K and my daughters was $72K two years later, we attributed that to my loss of income as I stopped working to care for our youngest child, who is disabled. We did not realize that that was HER EFC, on TOP of my son’s. How could it be that we had gone from “affording” $86K to “affording” $144K in two years? So when she got into Cornell, and they said at LEAST 4-5 times in our two day visit that Ezra Cornell said “I would found an institution where any person can find instruction in any subject” - sorry, but that was a load of bull. It really doesn’t matter how many times you say we can afford it. We COULD afford it - IF we were willing to drain our savings, mortgage ourselves and our retirement while not thinking or planning at all for our remaining child. We will be 67 when that youngest graduates from college - IF we can get her there. What are we going to borrow against at that age? I didn’t mind saying NO to Cornell - I was pissed to be told to my face that putting my disabled daughter in a private school so she could receive needed services or saving for retirement or her health needs was “a choice your family makes. If you bought a new car, you wouldn’t expect us to reimburse you for that, would you?”.
The thing is, yes, car dealers may send out advertising claiming to make luxury affordable, BUT - if they offered you a luxury car for $15,000 and told me the same car was $72,000, then your analogy would make more sense. They would be subject to some very very strict scrutiny over just exactly who was getting those good deals, and on what basis. False advertising, discrimination…And if race was one of the basies, really, in what world would that be OK? And that is even WITHOUT government subsidies and non-profit status.

I think it is very OK to “whine”. I feel that on these boards there is a thin group of people who think they get to decide what other people get to say. @MusakParent and I are commiserating about our very accomplished kids being told they really can afford to go anywhere they want - it’s just their terrible mean cheap parents who didn’t plan well enough for their futures that won’t take out big loans to send them.

I am not “jealous” of the families who send their kids to these schools. I think they are either in a different financial situation, or are have a greater stomach for risk. But I do think my comments have a right to be on this thread, because for SOME of us, the statements about “more affordable than you think” are just not true. The fact that the AVERAGE family pays much less, or that the AVERAGE grant is $48K or that the AVERAGE student debt is under $30K means nothing if you pay full price, with no grant and can’t pay nearly the full COA in cash.

111

See, the other thing is, do luxury car companies try to get your CHILD to buy a car, based on YOUR income, and imply that it is “expected” that parents with more means would buy them a nicer car? Seriously, you don’t get how warped this system is?

112

Cornell didn’t give an allowance for medical bills for your disabled child? That’s surprising.

I liken the college determination of “affordability” to the mortgage company’s determination (or at least before 2008): the mortgage bank doesn’t care about your contributions to 401k, your vacations, your college savings needs, and your childcare costs. They see the mortgage as the first payor. When we were applying for a mortgage for our first house, in the 1990s, we were told we could afford a $440k mortgage. We just laughed. Yeah, maybe if our only other expenses were food and utility bills. We ended taking a $210k mortgage, which was comfortable for us at the time.

113

Gudmom- I hear what you are saying, and agree that discovering late in the game that reality and the “pitch” don’t apply to you must really sting.

But honestly- should the colleges tailor their message to account for every single variable that faces families as they raise their families? I could lay out 15 different scenarios of people who discover they can’t afford their EFC’s for 15 different reasons (breadwinner is disabled, family taking care of elderly parents requiring round the clock care not covered by Medicare/Medicaid, parent with PTSD who can’t work but also can’t qualify for disability because only losing an arm or leg is considered “disabled” by the insurer, etc.)

Do colleges want to be in the business of rank ordering whose “stuff” is worse than others?

No. They have general guidelines about aid, most of which are based off of our tax code, and then individual families need to educate themselves about how and when the policies kick in.

And I know dozens of kids right now who have taken the merit aid at Drexel, Northeastern, Juniata, American… who found their need based aid at the need only schools either inadequate or non-existent. So it’s not like your choices are mortgaging your future forever vs. your kid flipping burgers forever.

Every family needs to figure this out. Your feelings are legitimate- but I bet there’s someone in your community right now whose kid has HIGHER stats, their financial situation is worse, and they discover that their choices are even starker than yours. That’s why it feels like whining. Inevitably the conversation turns to “it’s so great to be Pell eligible” which is a crock, or “poor kids get free rides” which is true in the sense that there is more than one kid getting a free ride- hence the plural- but that situation is relatively rare which is why it makes the headlines in the newspaper. If you live in Bridgeport, CT and your single mom drives a school bus for a living, the likelihood that you are getting a free ride to Harvard is reasonably close to zero. If you make it to college at all.

114

The challenge for many including myself is that college is seen as a consumer good/product and it involves our children. We were a full pay family whose daughter just graduated from Harvard. I am incredibly thankful that we had that capability and I do not regret a penny of the expense to provide that for her.
It does bother me greatly though that many kids who have the credentials cannot afford to attend our best colleges. I understand that we all make choices in regard to our financial circumstances but our children don’t. The mix of variables in this conversation are both understandable yet disturbing.

115

The most qualified have other choices at merit granting schools. The student also needs to be open to those schools and not consider them ‘lesser.’

116

@GreatKid Thank you, you seem to understand better what I was trying to convey. My kids had great options due to their own hard work and the fact that we ARE able to contribute quite a bit to their education - but not anywhere close to $800K for 3 kids. I don’t begrudge anyone who can get an Ivy education, either with aid or full pay, I just really dislike being lectured about “grown-up choices” by other posters. And I also do think the schools ARE claiming that you can “afford” the EFC, or they would not call it “EXPECTED “ family contribution. It would be much more honest if schools called their financial aid offers “discounts”, or “incentives”, and left the whole “expected” part out.

117

I do agree that the phrase “expected family contribution” is very misleading. So many students and parents come on the board every year saying, “I don’t understand how college XYZ expects me to pay this much,” or “my EFC is only $8k, but the the $70k school is only giving me $20k in financial aid!” It’s really more of an index than an expected contribution. It should be expressed as an index, not in dollars, because the EFC rarely is what the family actually pays – at a meets-full-need school or otherwise.

Maybe a new system can assign a family a number on a scale from 1-20, and it would be different for federal aid and for each college. When you file Fafsa, you get your federal index number. When you do the NPC for each school, you get the your index number for that school, with each number representing a different type of potential package. Say, 1-5 you are eligible for some level of Pell grant, and at 20 you are full pay everywhere. A family that earns, say, $125k would be a level 7 at Yale, but a level 17 as an OOS family for University of Wisconsin.

118

EFC is a federal term which has to do with federal aid. The EFC can be $0, but the feds can’t tell the school what to charge or how much aid to give, so the cost to the family is rarely $0

119

Also, the current system of meets-needs is much more arbitrary than it even seems. I live in a town where incomes are high, and also multiple births are high. There is even a yearbook page for the multiples.

My next door neighbor has two sets of twins. My other friend has a singleton followed a year later by triplets, and another friend has quads. I have three kids. Assume we each have an EFC that equals full pay for 2 kids in college, and that the cost is $70/yr for each.

All other things being equal, I would be full pay for all three of my kids, since the two in college now overlap by 2 years. The third is 8 years younger. Total $280x3
the friend with triplets would pay full tuition for 1 for 1 year, then 2x4. So $280 for kid 1, $280 for kid 2, and $70 for kid 3. Nothing for kid 4.
The one with quads would receive 2 x 4 years free tuition, as all her kids would be in at once. So $280 x2 total cost, two kids go free.

Oh, but my neighbor would really get screwed, because her kids are exactly 4 years apart,
so they would be full pay for 8 years, $280 x 4.

I don’t think my daughter or I got “screwed”, we just got fed a load of BS. She is going to a great (public) engineering program OOS and is pretty excited about it. I’m sure she will have a very good experience. And I was “adult” enough to tell her that no, it really isn’t a good “investment”, despite the financial aid officer’s claim. She would make EXACTLY the same amount, and have the same opportunities, after graduating from her other very good, much more affordable, choices. But I DO feel sorry for people I see around me, adults, who DO buy into the “affordability “ line. I know a family with 4 kids that is allowing the first two to EACH borrow more than $40K a YEAR; disabled Dad, teacher Mom, kids going to private, non-elite but expensive college. They are the ones who are going to become the statistics, because their parents aren’t able to say “no”, or don’t understand the implications of that type of debt for their child’s future.

I think maybe it’s OK if it isn’t fair, if it is arbitrary, if you can’t make everyone happy or equal. Just don’t TELL me that it IS fair, or non-arbitrary. I am an adult, I can make adult decisions, but I don’t need other people to decide how I get to feel about that. I feel that “leveling the playing field” by making sure everyone has a chance to experience poverty either as a new grad or a new retiree is kind of a poor philosophy.

120

Of course it’s arbitrary. Family of four living in SF on $100K vs. family of four living in rural Montana on 100K. Do you really expect every single college to develop customized aid packages for every single kid who applies, taking into account every single nuance of their financial situation?

No. They have a formula. If you have an extenuating circumstance and you feel their formula did not adequately weight your situation, you write them a letter with your particulars, and in most cases, a financial aid officer does a deep dive to make sure they haven’t missed something material. They don’t promise that by filing an appeal you will get an extra 10K, they promise that someone who does this for a living will review your file.

This is the only arbitrary part of life that irks you? I’ve got a laundry list. Why does my state flagship value basketball vs. investing in academics when my taxes are so high? Why did my HMO send me a gift card after recent surgery (this is not a joke) to thank me for using my in-network providers… why can’t they reduce my premiums instead of sending me stuff? Why did a night in a hospital (with no food, I was pre-op) cost $17K which included NOTHING since every other charge (medications, CT Scan, etc.) was billed by a different provider?

College is cheap compared with emergency surgery. And I cry for people without insurance.

So yeah, financial aid is arbitrary. And for the kids whose finances are more typical than yours- yes, they will get aid, and no, it isn’t fair.